Cryptocurrency is an efficient means of transferring money over the internet. It is an alternative to conventional fiat money with a decentralized network and a transparent set of rules. It was first introduced in the year 2008, in the wake of the global financial crisis, as a way for people to control their own money rather than the banks and the government. The cryptocurrency’s price is determined by the demand and supply of the market. Facebook’s Libera, Bianca’s Venus, Ethereum, and Bitcoin are a few cryptocurrencies.
At first, many people were skeptical regarding whether to invest in cryptocurrency of any kind because the market was considered highly volatile and faced considerable fluctuations in prices. Still, over the past decade, countries like Australia, Japan, and Switzerland have smoothed the way for investment in cryptocurrency by introducing laws and regulations to make payments through cryptocurrency easier. Various corporations, including big names such as Microsoft, KFC, and Wikipedia, have started using cryptocurrency for payments. Low transaction fees, secure and fast international payments, and financial sovereignty are its primary appeal.
While some countries have welcomed cryptocurrencies with open arms, others have been actively trying to ban and stifle them. China, India, and Saudi Arabia are prominent names among countries where cryptocurrency trading is prohibited or where payments cannot be made using cryptocurrency. However, despite these bans and restrictions, the trade or usage of cryptocurrency, especially Bitcoin, has not been eradicated. People of these countries are still using sites like Paxful or Bisq to trade and invest in It. This fact proves that no government has the power to completely ban the use of Bitcoin unless they prohibit the use of the internet for the entire nation.
Bitcoin is by far the most successful cryptocurrency to date. It was launched in 2009, and since then, numerous people have invested in it. Bitcoin coin hit a new high in January 2021, reaching the price of US$ 42,000. Bitcoin’s user base has increased from 120,000 users in 2013 to 45 million users in 2020. Even the mainstream financial institutions are warming up to it now, but mostly the Bitcoin investors are relatively young males aging between 31-40 years. However, most people still believe that all the hype is just a bubble; it’s too risky an investment and is susceptible to fraud.
There are various categories of people who are using and investing in Bitcoin at this point.
First and foremost are those whom Dan Lamier called “people with a cause.” These are the people belonging mostly to developed countries going out of their ways to use Bitcoin. They want it to be successful, much like the people who are buying electric cars and want the world to go green. According to a survey carried out by 2gether, most of such users are involved in white-collar work with an advanced academic background. These buyers of Bitcoin are mostly making use of the cryptocurrency to make payments for traveling and eating out.
Next is the category of people belonging to countries with high rates of inflation. In such countries, people view Bitcoin as a store of value like gold and property. A trailer of this theory was seen during the COVID 19 pandemic when the US started printing more currency notes to inject into the economy. The investors anticipated an increase in inflation in the US. As a result, Bitcoin prices hit a historic 250% price gain at the end of 2020.
It has been noted that in developing countries, the adaptation of Bitcoin is higher than in developed countries. In many countries, Bitcoin is also being used by investors as a hedge against political and economic instability. Nigeria and Columbia are amongst the list of countries where Bitcoin trading is the highest. Since the rate of Bitcoin is independent of any government, it is considered a haven asset. According to a survey, inhabitants of Venezuela and Zimbabwe usually invest in Bitcoin to protect their savings and access and sell their savings wherever and whenever they want to.
Then some people are investing in Bitcoin because they are attracted to its cult-like appeal. These people want to view themselves as radicals. They participate in Bitcoin conferences and feel cool using Bitcoin jargon. Such investors even have a preferred car to buy using Bitcoins: the Lamborghini.
Like in marketing and selling of all other commodities, social media and celebrities play a significant role in promoting Bitcoin. Paris Hilton and Jamie Foxx are amongst many stars who were amongst the first people to invest in Bitcoin. They even used their social media platforms like Twitter and Reddit to announce what they were up to. So many fans are now just following the lead of their beloved icons and investing in it too.
The volatility of the Bitcoin market is also appealing to the sense of thrill for many investors. People have likened the feel of investing in the Bitcoin market to being in Vegas. Here, there is always something happening, unlike the stock market. Many young people, especially those who liked playing video games, find the same adrenaline rush in the Bitcoin market. They are attracted to such high-risk investments makes perfect sense.
Then some people wish to hit it big. These people have invested whatever savings they had from other sources into Bitcoin to hope the value of Bitcoin will eventually rise. These are the long-term non-speculative investors who don’t already have access to a huge chunk of wealth. Such people are influenced by stories of other regular people who became rich by investing in Bitcoin.
The concept of fractional shares called satoshis enables people to invest a small amount at a time even though the selling price is soaring high. Many of the investors start small, do their research, and learn about making the right investments. These are the people trying to play it safe, thus proving that not all the investors are the ones who find glory in taking huge risks.
Elon Musk, the richest man on earth, is a supporter of Bitcoin. He has said that “Bitcoin is on the verge of getting broad acceptance by conventional finance people.” It’s predicted that Bitcoin could be worth more than US$ 1 trillion in under next ten years. Whether Bitcoin reaches its apex or the bubble will soon pop is yet to be seen.